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4 Medical Billing Issues Affecting Healthcare Revenue Cycle

Addressing these four common medical billing challenges can have a positive impact on the healthcare revenue cycle.

August 02, 2016 - Medical billing is the backbone of healthcare revenue cycle management, but many providers experience significant challenges with efficiently and accurately billing patients and payers for services they perform.

The medical billing process can be a pain point for some providers because it involves an array of healthcare stakeholders and each step to getting paid relies on the previous interaction. Healthcare organizations must communicate across departments and payers as well as ensure that crucial information is properly captured in each step of the process.

Despite the long and winding journey, effective medical billing is essential for optimizing healthcare revenue cycle management and reducing days in accounts receivable.

Here are the four most common medical billing challenges and some tips for providers about how to streamline and improve the process.

The medical billing process usually starts at the initial point of contact between a patient and a healthcare organization. During this interaction, front-end staff must collect patient information that will lay the foundation for billing and collecting.

“From a revenue cycle perspective, getting the most accurate information up front starts with patient scheduling and patient registration,” explained Gary Marlow, Vice President of Finance for Beverly Hospital and Addison and Gilbert Hospital in 2015. “That provides the groundwork by which claims can be billed and collected in the most efficient and effective manner possible.”

“The last thing you want is getting a claim submission kicking back to them then having to work their way through the institution. If you get the information up front in as pleasant a manner as possible, it saves heartache for the patient and family if the claim is processed and cleared in a judicious manner.”

While ensuring a patient’s demographic information is correctly put into the provider’s billing system is essential, it is also key that front-end staff also verify health insurance status and coverage.

However, a ClaimRemedi survey found that eligibility issues are the top reasons for claim rejections, and about 8 percent of claims submitted are rejected because of eligibility problems.*

The main goal of medical billing is to collect the full amount for services rendered, but many healthcare organizations have recently experienced more issues with collecting payments from patients because of an increase in patient financial responsibility.

About 90 percent of the 12.7 million individuals participating in the 2016 open enrollment period selected a high-deductible insurance plan, according to CMS. The increase in high-deductible plans shifted healthcare payment responsibility to the consumer rather than the payer.

An Instamed report from June stated that nearly three-quarters of providers have witnessed an increase in patient financial responsibility in 2015, but a report from McKinsey & Company also found that providers only expect to collect 50 to 70 percent of a patient’s balance after a visit. Seventy percent of providers anticipate a month or longer to receive payments from patients.

To help boost patient revenue, healthcare organizations should implement financial policies that include estimating costs of services, informing patients about financial responsibility, and collecting some of the balance during a visit.

“Now with high deductibles, because many more people are forced into a situation where they owe far more money than they used to for the same services, their share has grown so significantly that a lot of providers have decided we need to try to collect this money at or near the time of service,” Mark Owen, Director of the Division of Emergency Medicine for Payor Logic, said in a 2015 interview.

“But we need to know what that amount is in order to do that. With the insured patient, we didn't really used to need to know this information about what they owed because it wasn't a significant amount and a very high proportion of the patients paid when they received their bill.”

Healthcare organizations must also take steps to simplify patient bills. The Department of Health and Human Services responded to reports that medical bills were too confusing because of medical jargon and multiple requests for payments. The federal agency developed a contest that will award several innovators for developing an easy-to-understand medical bill for patients and a simplified medical billing system for providers.

As most healthcare organizations know, submitting a claim involves more than just pushing a button. Providers must engage robust data collection tools, develop effective communication channels between front-end and clinical staff, and streamline denials management procedures.

Claims management is complex process for the entire healthcare organization, especially as more providers transition to data-driven value-based care models.

However, one-third of providers still use a manual process for denials management, reported HIMSS Analytics in July.

“Given the complexities around submitting claims and the labor associated with managing denials, it came as a surprise that more organizations have not automated the denial management process through a vendor-provided solution,” stated Brendan FitzGerald, HIMSS Analytics Director of Research.

Automating the medical billing and claims management process could help providers retrieve reimbursements from rejections and denials in a timelier manner. The HIMSS Analytics report stated that organizations with a vendor solution were able to better identify root causes of denials, manage resolutions, and reduce write-offs.

“There is a tremendous amount of opportunity with automation,” John Dugan, CPA, Partner at PricewaterhouseCoopers, explained in an interview. “From a claims processing perspective, there are still a number of manual processes as you go through the entire revenue cycle, which in and of itself contributes to inaccuracies. That is why there is a huge need for claims scrubbers, follow-up work, etc.”

Dugan added that automated solutions can help organizations monitor and improve on key performance indicators, such as days in accounts receivable, discharged but not final billed, and case mix performance.

Inaccurate coding remains a top medical billing error

While ICD-10 implementation went smoother than expected for most healthcare organizations, coding inaccuracies are still a significant challenge for many providers.

In July, the American Health Information Management Association (AHIMA) identified the top coding challenges, including incorrectly applying the seventh characters for trauma and fracture codes, improperly using procedure codes that drive a diagnostic related group, misidentifying respiratory failure, mistaking the use of guidance tools, and insufficiently documenting devices, components, and grafting materials.

Incorrectly or mistakenly coding a medical service will likely lead to an uptick in claims denials, so healthcare organizations should regularly train clinical staff on ICD-10 coding updates and encourage front-end staff to communicate with clinicians if there are documentation issues.

“We continue to recommend that hospitals and providers utilize more of an ongoing training program where perhaps the education occurs over two or four weeks,” Michelle Leavitt, Director of Courseware and Product Strategy at HealthcareSource toldEHRIntelligence.com in 2014.

“The coders should be spending two, three, four hours a week on the education when it makes sense for them, so that they have the flexibility in their schedule to do it when it makes sense.”

*Correction: A previous version of this article stated, "However, a ClaimRemedi survey found that eligibility issues are the top reasons for claim rejections, and about 80 percent of claims submitted are rejected because of eligibility problems."